Press Release

JCR-VIS Upgrades IFS Rating of Jubilee Life Insurance Company Limited

Karachi, May 04, 2015: JCR-VIS Credit Rating Company Limited has upgraded the Insurer Financial Strength (IFS) Rating of Jubilee Life Insurance Company Ltd. (JLI) from ‘AA’ (Double A) to ‘AA+’ (Double A Plus). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on March 20, 2013.

The private sector life insurance industry premiums have posted a CAGR of 25% over the last 5 years (FY09-FY13). Bancassurance business has been the key driver of growth in industry gross premiums while business generated through direct sales force has witnessed moderate to steady growth. Given the low life insurance penetration in Pakistan, healthy growth in gross premiums is expected to continue.

The assigned ratings incorporate JLI’s strong capacity to meet policyholder liabilities as evident from sound capitalization levels and adequate liquidity profile. Risk profile of the company is also supported by conservative investment profile and nature of policies underwritten where contribution of the company in the claims to be paid declines over time with growth in cash values. Business profile derives strength from favorable persistency levels and healthy growth in business volumes and profitability. JLI has outperformed sector growth rate resulting in an increase in market share. Going forward, management has projected gross premiums to nearly double over the next three years which is expected to translate into a market share of over one-fifth of total life insurance industry premiums. Profitability indicators are also projected to depict significant growth.

Business mix of the company is dominated by individual life unit linked business which represents around 85% of the gross premium with remaining business generated through Group life and accident & health business segments. Within individual life unit linked segment, business generated through bancassurance has been the key driver of growth with Habib Bank Limited (HBL)
being the major contributor. Bancassurance business generated from banks other than HBL has grown in absolute terms with management expecting higher gross premiums from the same in 2015 due to recent partnership with a leading commercial bank. Productivity indicators of the Direct Sales Force (DSF) team have improved considerably on the back of management’s strategy to improve efficiencies. Size of the DSF team has reduced considerably with the implementation of this strategy. In line with industry trend, surplus generation in relation to gross premium has declined for group business due to increasing competition within this segment.

With growth in gross premiums, total Assets under Management (AUMs) witnessed significant growth and stood at around Rs. 39b at end’Dec’14. Given the growth in size of AUMs, there is room for further strengthening the investment management infrastructure. Returns of funds under management have remained competitive. Board oversight is considered satisfactory. Management team of the company comprises experienced professionals who have been associated with the company for a number of years

For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-71 (10 lines) or fax to 35311873.


Javed Callea
Advisor

Applicable Rating Criteria: Life Insurance & Family Takaful Rating Methodology (Jan 2009)

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